BILL NUMBER: AB 1963 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 29, 2012
AMENDED IN ASSEMBLY APRIL 25, 2012
INTRODUCED BY Assembly Member Huber
FEBRUARY 23, 2012
An act to repeal and add Section 38 to the Revenue and
Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 1963, as amended, Huber. Personal income tax: Sales and use
tax: Legislative Analyst's Office: report.
The Personal Income Tax Law imposes taxes based upon taxable
income, at specified rates, and allows a taxpayer to elect to take a
standard deduction, as provided. Existing law imposes state sales and
use taxes on retailers and on the storage, use, or other consumption
of tangible personal property in this state at the rate of 61/4% of
the gross receipts from the retail sale of tangible personal property
in this state and of the sales price of tangible personal property
purchased from any retailer for storage, use, or other consumption in
this state.
This bill would require the Legislative Analyst's Office to assess
the potential changes to the laws
described above as proposed in the introduced version of
this bill, and to make specified recommendations to the Legislature
in a report to be issued in order to reduce revenue
volatility and to provide a report including these assessments to the
Legislature on or before July 1, 2013.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 38 of the Revenue
and Taxation Code is repealed.
38. (a) The Legislative Analyst shall submit a report to the
Legislature regarding the possible consolidation of the remittance
processing and cashiering functions and the mail processing
operations, of the Franchise Tax Board, the State Board of
Equalization, and the Employment Development Department.
(b) The Franchise Tax Board, the State Board of Equalization, and
the Employment Development Department shall provide the Legislative
Analyst all data and information that the Legislative Analyst
identifies as necessary for completing the report and shall assist
the Legislative Analyst in the preparation of the report. The
information provided to the Legislative Analyst shall include, but
not be limited to, an evaluation of the short- and long-term fiscal
and budgetary advantages and disadvantages that would result from the
proposed consolidation of the remittance processing and cashiering
functions and the mail processing functions of, the Franchise Tax
Board, the State Board of Equalization, and the Employment
Development Department. Any data and information requested by the
Legislative Analyst shall be submitted on or before July 1, 2004.
(c) The purpose of the report required by this section is to
determine, to the extent possible and based on available information
and reasonable assumptions, if there are any benefits to the
consolidation of the management and control of these operations based
on all of the following criteria:
(1) The elimination of duplicative functions and fragmented
responsibilities.
(2) Increased operational efficiencies due to the use of improved
technologies and economies of scale.
(3) Additional interest earnings for the state.
(d) For purposes of this section, "remittance processing and
cashiering" means receiving, batching, balancing, and depositing
remittances.
(e) The Legislative Analyst shall provide to the Legislature its
report and any recommendations and considerations with regard to the
possible consolidation of these functions by November 1, 2004.
SEC. 2. Section 38 is added to the
Revenue and Taxation Code , to read:
38. (a) It is the intent of the Legislature to reduce General
Fund revenue volatility, as identified in the January 2005 report by
the Legislative Analyst's Office. To achieve this objective, the
Legislature must have an analysis of the methods by which a reduction
in revenue volatility may be achieved without a reduction or
increase in the total available revenue.
(b) On or before July 1, 2013, the Legislative Analyst's Office
shall submit a report to the Legislature assessing potential changes
to the state income and sales and use tax laws in order to reduce
revenue volatility, diversify revenue sources, and improve California'
s economic climate. The report shall include, but is not limited to,
the following:
(1) A review of California's current and historical revenue
volatility, including, but not limited to, the percentage of the
gross state product that is made up by the General Fund budget over a
period of 10 years.
(2) Proposals for tax reforms that would end California's revenue
volatility, are sum revenue neutral, and do not require amendments
to, or revisions of, the California Constitution. To the extent
possible, the Legislative Analyst shall use dynamic revenue modeling
in determining viable proposals in order to provide an accurate
picture of the impact any proposed tax reforms would have on state
revenues.
(3) An explanation of the calculations needed to determine revenue
neutrality.
(4) An analysis of the effect a reduction of taxation on
individual income would have upon state revenues and revenue
volatility.
(5) An analysis of the effect of imposing a tax on the sale or use
of services, concurrent with a reduction of the sales and use tax
rate, would have upon state revenues and revenue volatility. This
analysis shall include whether a credit or exemption to the services
tax should apply to the sale of services between businesses. This
analysis shall also include the positive or negative revenue impact
of excluding the following services from a tax on services:
(A) Necessary or licensed medical services.
(B) Services related to education.
(C) Automotive repair services.
(D) Accounting, auditing, and other services provided by licensed
accountants or licensed accounting firms.
(E) Legal services provided by licensed attorneys.
(F) Services related to agriculture and livestock.
(G) Services related to housing, real estate, and construction.
(H) Services related to banking.
(I) Securities and investment management services.
SECTION 1. (a) The Legislative Analyst's Office
shall assess the changes to the tax laws as proposed in the February
23, 2012, introduced version of this bill and shall make
recommendations on both of the following:
(1) How the state could diversify, in a revenue-neutral manner,
the tax revenue it would have received as a result of the changes to
the tax laws as proposed in the February 23, 2012, introduced version
of this bill, so that annual state tax revenues are less subject to
volatile fluctuations due to economic upturns and downturns.
(2) The impact on state tax revenues due to the exclusion from the
definition of services, as specified in Section 6301 of the Revenue
and Taxation Code, as proposed in the February 23, 2012, introduced
version of this bill, of all of the following:
(A) Necessary medical services.
(B) Services related to education.
(C) Automotive repair services.
(D) Tax preparation and filing services.
(E) Licensed legal services.
(F) Services relating to agriculture and livestock.
(G) Services relating to housing, real estate, and banking.
(b) The recommendations made pursuant to subdivision (a) shall be
issued in a report to the Legislature on or before July 1, 2013.